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Why Canada shouldn’t let businesses sue for defamation

By Hilary Young

Sun., Sept. 16, 2012

In 1990, McDonald’s Corp. sued two Britons — a gardener and an unemployed postman — in defamation. It accused them of saying that McDonald’s food is unhealthy, that the company exploits children through advertising, and that it is anti-union, among other things. After a seven-year trial in which McDonald’s reportedly spent £10 million in legal fees and the two defendants spent about £40,000 that they raised through public donations, McDonald’s won a partial victory and was awarded £60,000 in damages.

The so-called “McLibel” suit came to symbolize the perversity of modern defamation law — especially as it applies to speech about corporations.

When Mark Prince created a website inviting people to describe their customer service experiences with Future Shop, he was threatened with a defamation suit. On the advice of a lawyer, Prince shut the site down. (Jan. 18, 2001) (Ken Faught / Toronto Star)

Fed up with suits like this (sometimes called Strategic Lawsuits Against Public Participation, or SLAPPs), Australia changed its laws to prevent most corporations from being able to sue for defamation. Canada’s provinces should do the same.

Canada is no stranger to SLAPPs. For example, when Mark Prince created a website inviting people to describe their customer service experiences with Future Shop, he was threatened with a defamation suit. On the advice of a lawyer, Prince shut the site down. It wasn’t that what he’d done was necessarily defamation, but it would simply have cost too much to defend himself.

Cases like this highlight the fact that defamation is easy to allege and hard to defend. Those who claim to have been defamed need only prove that the defendant published something about them to at least one other person, and that a reasonable person would think less of them as a result. Plaintiffs do not have to prove they suffered any actual loss to their reputation, or that the statement was false. Instead much of the burden falls to defendants to prove a defence, such as that the statement was true.

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As a result, most people will retract or apologize, even if a statement is true, rather than spend a small fortune defending their right to say it. This chilling effect doesn’t only affect individuals; the news media’s publishing decisions are also influenced by defamation law.

That the burden of proof is light on plaintiffs and heavy on defendants is true of defamation law in general, but there are reasons why corporations in particular should be prevented from suing.

First, unlike human beings whose dignity is affected when they are defamed, corporate reputation is an economic asset. Courts have often justified defamation’s harsh effect on freedom of speech on the basis that human dignity is at stake, but corporations do not have a dignitary interest in reputation. Australia considered this persuasive in changing its laws.

In addition, freedom of expression about corporations is especially important given their influence in our society. They affect the economy, politics, the environment and consumer safety. If corporations can stifle criticism through defamation law, society is less informed about matters of public interest. And although false information about corporations is less valuable than true information, making defendants spend thousands of dollars to prove that what they said was true means that the law stifles both true and false speech.

Further, defamation law isn’t the only way to protect corporate reputation: Corporations can influence their reputations through advertising and public relations. When a company’s reputation is threatened, these reputation management mechanisms are at least as effective as defamation law in restoring reputation.

There are also other laws, like the tort of injurious falsehood, whose goal is to protect business reputation against unjustified attacks. They are harder to prove than defamation, but in my opinion they strike a better balance between protecting reputation and protecting free speech by making the plaintiff prove more and the defendant prove less. This too was persuasive to Australian lawmakers.

Canadian corporate reputations are important assets worth billions of dollars, and an unjustified attack can cost money and jobs. However, defamation law is not an appropriate response to attacks on corporate reputation. Eliminating corporations’ ability to sue for defamation, as Australia has done, would help protect important speech.

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Although it would make it harder for corporations to win a legal remedy when their reputations are harmed, they can respond with other legal and public relations tools that are less harmful to freedom of expression.

Hilary Young teaches in the faculty of law at the University of New Brunswick.

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